BackOne minute guide: Convenience charges
It is either a flat fee or a percentage of the amount that you spend
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If you transact online—be it to book tickets or to pay bills—chances are that you have paid an extra amount as convenience fee. This charge is levied by the channel that allows you to pay for a product or service using its platform or payment mode.
WHEN DOES IT APPLY?
Usually, convenience fee is applicable on small-ticket purchases and services. For instance, if you book a movie ticket, flight ticket, pay an electricity bill or school fee online, a convenience fee will be levied on the transaction. Convenience fee can also be referred to as Internet handling fee.
Sometimes, online portals club convenience fee and service tax together without giving the break up. For most websites, convenience fee is one of the revenue models.
The idea behind convenience fee is to charge for the ‘privilege’ you get of using alternative payment options. It is also to cover the payment processing charges and what payment gateways have to pay banks for online transactions. The fee is usually non-refundable if you cancel the product, say, tickets or clothes you bought.
HOW MUCH IS PAID?
Convenience fee is either a flat fee or a percentage of the amount that you spend. The amount varies across segments. For instance, travel website Cleartrip charges a non-refundable convenience fee of 200 per passenger per segment for domestic bookings and 350 per passenger per ticket for international bookings, according to the website. Similarly, Easemytrip charges 250 and Makemytrip 290 for domestic tickets. Foodfest, an app that allows you to order food, charge a flat 99 convenience fee to its customers. Bookmyshow charges 30 per ticket booked.
Usually, all websites that charge convenience fee inform the customer in advance. It is included in the total transaction amount. Irrespective of the mode of payment, the fee remains the same.
Convenience fee is not a surcharge, which is a cost added simply for the ‘privilege’ of using a credit card.
WHAT YOU SHOULD KNOW
To encourage consumers to use apps and mobile banking, online travel portals and movie ticketing platforms waive off convenience charges.
Last month, in a bid to increase online payments, the government issued a statement saying essential steps for promotion of electronic payments will include withdrawal of surcharge, service charge and convenience fee on cards and digital payments currently imposed by various government departments. This means that soon booking tickets on the Indian Railway Catering and Tourism Corp. (IRCTC) website or paying water, telephone and electricity bills will not attract an extra charge if paid by card.
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